On August 9, 2022, President Biden signed the CHIPS and Science Act into law. The $280 billion package is designed to boost domestic semiconductor production; strengthen American manufacturing, supply chains and national security; and invest in research and development, science and technology.
Creating Helpful Incentives to Produce Semiconductors (CHIPS) for America Fund - The Act will provide $52.7 billion for American semiconductor research, development, manufacturing, and workforce development. This includes $39 billion in manufacturing incentives, including $2 billion for the legacy chips used in automobiles and defense systems, $13.2 billion in R&D and workforce development, and $500 million to provide for international information communications technology security and semiconductor supply chain activities.
$1.5 billion for the Public Wireless Supply Chain Innovation Fund - The Act will boost U.S. leadership in wireless technologies and their supply chains by including $1.5 billion for promoting and deploying wireless technologies that use open and interoperable radio access networks.
25% Advanced Manufacturing Investment Credit - The Act will provide a 25% investment tax credit for qualified capital expenses for manufacturing of semiconductors and related equipment. The bill requires recipients to demonstrate significant worker and community investments, including opportunities for small business and disadvantaged communities, and ensuring equitable economic growth and development. Safeguards will be implemented to ensure that recipients do not build certain facilities in China and other countries of concern. U.S. domestic semiconductor manufacturers are eligible for the credit, while foreign entities are excluded. An advanced manufacturing facility is one in which the primary purpose is the manufacturing of semiconductors or semiconductor manufacturing equipment.
In addition, the Act will invest in research funding and it will establish a technology, innovation, and partnership directorate at the National Science Foundation to focus on semiconductors, science, energy, technology, and so forth. It will make investments in regional innovation and technology hubs across the country and it will expand investments in STEM education and training.
If you have any questions on how the CHIPS and Science Act may affect your specific situation, please feel free to contact us. Our team is well-versed in the many facets of the CHIPS and Science Act and we will be proactive in assisting clients in maximizing savings opportunities.